One of the largest components of the Affordable Care Act, the online exchange marketplace for health insurance, launches tomorrow. Here's what you can expect, and how it may change healthcare.

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MONDAY, September 30, 2013 — Congress may still be debating particulars of the Affordable Care Act, but even so, one of the bill’s major tenets is about to go into effect. Tomorrow marks the opening of the health insurance exchange marketplace — an online market designed to create enough competition between insurance companies to bring prices down, allowing previously uninsured consumers to gain access to healthcare.

For individuals who previously were not covered under their employers’ health plans nor government plans such as Medicaid, the new insurance marketplace provides affordable health insurance options. But it’s a double-edged sword — the law includes the individual mandate, so those who aren’t insured and don’t purchase insurance will have to pay a fine beginning January 1, 2014.

The launch of the marketplace is the start of one of the major goals of the Affordable Care Act (ACA), namely, to provide an affordable option to the 48 million Americans without insurance. Small business owners who provide insurance to their employees and people who were previously purchasing their own insurance will also be eligible to participate in the market.

The Nuts and Bolts of What’s Happening

“Up to this point, there really has not been a rational market in individual insurance,” said Dan Ehlke, PhD, assistant professor of health policy and management at SUNY Downstate Medical Center. But with the new marketplace, individuals are not only expected to face reasonable costs, the government will provide subsidies to those who qualify based on low income. In fact, of the 7 million people the Congressional Budget Office hopes to enroll, 6 million will receive some government support.

Though the marketplace opens tomorrow, the insurance coverage people purchase won’t take effect until January 1, 2014. While the market is primarily online, it’s possible to shop for and order plans over the phone, or in person, at community health centers, Andrew Rubin, MA, vice president for medical center clinical affairs and affiliates and New York University Langone Medical Center, noted. Individuals who are hoping to purchase insurance through the marketplace must do so before March 31, 2014, though Ehlke advised people to start looking as soon as they can.

The marketplace offers a variety of different plans, which are classified based on the types of expected costs. “The whole concept behind this insurance marketplace is to provide consumers with the ability to actually buy health insurance, but secondarily it’s designed to lay out different options and costs for people to understand what they’re actually buying,” Rubin said.

The main differences between plans is the relationship between monthly costs and out-of-pocket payments for doctors’ visits. For the top-rated platinum or next-best gold plans, monthly premiums will be higher, but out-of-pocket costs for procedures and doctor visits will be lower, better for someone who expects to need more healthcare. Lesser plans, silver and then bronze, also offer full coverage, though these are designed to have lower monthly premiums and higher costs for separate, specific medical costs, preferable for healthier people.

For example, Ehlke suggested that younger, healthier people may opt to purchase a silver or bronze plan because they aren’t expecting to have many health visits. “Younger people need not look at the gold plans, which are the most generous,” Ehlke said. Instead, “they should look for those that have a higher deductible,” which is the cost a participant pays to visit a doctor, and a lower monthly premium.

There are also “catastrophic” plans available, primarily aimed at younger people, which have very low monthly premiums but only offer coverage in the event of an emergency or health crisis.“I would recommend almost anyone carry health insurance coverage because you just never know,” Ehlke said, advising that younger people still opt for plans that offer more than just catastrophic coverage.

Additionally, there are “child-only” policies available for parents to purchase for children who are not already covered. Also with the new marketplace, the government requires insurers to take on new customers regardless of their pre-existing conditions, and they cannot charge more because of such a condition.

Rubin warned that though some big-name insurance companies are offering plans on the exchange, the doctor networks offered under these plans will not necessarily be the same as the doctor networks offered under plans off the exchange. Rubin emphasized the importance of consumers taking the initiative to ensure their doctors are in the correct network.

While the opening of the marketplace presents new options to the uninsured, individuals who already receive their health insurance through their employers will not be affected. Those who are on Medicaid or Medicare do not have to change their health care plans through the exchange, and will be unaffected as this part of the law rolls out.

Prices are Lower than Expected

Just a week before the start of the marketplace, a report from U.S. Health and Human Services (HHS) announced that states have more insurance companies offering plans, and as a result of the competition, costs were lower than originally expected. In the report, HHS reported that in the marketplaces they’re helping to run, there are an average of 53 health plans offered for consumers.

“The fact that we do have a great number of plans is promising but was not something that was automatic,” Ehlke said. Whether insurance companies would get on board with the marketplace was always up in the air and “policy members were holding their breath,” he said.

This is the first time a quarter of the insurance companies offering plans have opted to do so, which HHS reported is likely contributing to the increased competition that has driven costs down. According to the report, premiums will be 16 percent lower than originally anticipated.

One important factor of the impending legislation is that though states are offering individual markets, all 50 states will be offering a health exchange marketplace of some kind starting tomorrow.

This had led to some confusion among people who have heard their state is not offering its own exchange, according to Rubin. “If you live in a state where they’re not launching their own marketplace, the federal government is doing it for them," he said.

Of the 50 states, 36 and the District of Columbia are not running their own, and thus HHS will completely or partly run the marketplace in these states.

The variation is so great that in Tennessee, a family of four could expect to pay a $584 monthly premium, but in Wyoming, that same family could pay a $1,237 monthly premium. For a single young adult, that variation is similar, with a 27-year-old in Tennessee paying $161 monthly versus $342 monthly in Wyoming.

However, one large part of the law is that for if income is under a certain level, the government will make up for part of your insurance expenses in tax subsidies. So, even though variation is so broad between states, any family of four making under $50,000 a year will receive subsidies to bring the monthly premium down to $282 regardless of where the family resides. For a 27-year-old who makes under $25,000 annually, premiums will be brought down to $145.

“They should not go into this experience with an expectation that they will have to pay the full premium themselves,” Ehlke said. The Congressional Budget Office estimates that six out of every seven people signing up will get some level of government aid.

Still, a major misconception about the ACA is that it will provide free health insurance for everyone, which is not the case, said Rubin. He said that although the HHS says costs are lower than expected, that doesn’t mean it’s cheap. “There are going to be a whole lot of people who will still have a hard time coming up with $200 a month,” he said.

In the first few months and years of the marketplace, Ehlke said he expects there “could be a fair degree of turbulence at first,” as both buyers and sellers figure out the best prices for everyone.

“People have to be ready to continue shopping around in future years,” Ehlke said, which could be hard because studies have shown that individuals are very averse to changing their insurance plans. “People stick with their insurer through hell or high water,” Ehlke said, noting that this is often because it’s difficult to change. Luckily, the marketplaces make it easier to swap plans, he noted.

Despite the possibility of technical issues, Rubin said that this should be expected and “doesn’t mean health care reform doesn’t work.”

How Today Could Effect Healthcare

Even as critics and users alike anxiously wait to see how smoothly the marketplace finds its feet, the number and demographics of people purchasing plans to become newly insured could largely affect the future of American healthcare.

The hope is that lower premiums and options like the catastrophic plans will encourage younger individuals to sign up for insurance where they previously have not, which would widen the risk pool and allow insurance companies to charge lower premiums for everyone. Traditionally, younger people refrain from buying health insurance because they rely on their youth and good health to carry them through. Unfortunately, as the American population ages and puts higher demands on the healthcare system, it’s becoming increasingly important for younger people to contribute to insurance.

“How many of these young invincibles are going to sign up?” Ehlke asked. This answer to this question will start to answer questions over how effective the ACA’s strategy of expanding care to lead to better care for all will be.

While there has been confusion over what the law provides and how the marketplace will work, Rubin hopes that as more people sign up, the confusion will dissipate. “Once this settles out, I think people are going to realize, ‘Hey wait a minute, this isn’t so scary — it seems to be working,’” he said.

The ACA offers two types of reform — one part is for health insurance, and the other is health care delivery. The marketplace opening on Tuesday falls under the health insurance reform. “The broad benefit of insurance reform is that people across the country will no longer face the risk of being bankrupted or denied care when they need it,” Rubin said.

Other parts of the Act that fall into delivery reform include increased preventive care — for example, the law provides for everyone on Medicare to receive an annual “wellness visit,” and also covers more screening costs for diseases from diabetes and obesity to cancer to alcohol misuse. Larger aspects of nationwide delivery of healthcare that will continue to change include channeling resources more effectively, and valuing the quality of care over the quantity of care.

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